The Securities and Exchange Commission of Pakistan (SECP) on Wednesday allowed all lending Non-Bank Finance Companies (NBFCs) including Non-Bank Microfinance Companies (NBMFCs) to defer repayment of principal loans by their borrowers for one year, under the present circumstances owing to the outbreak of COVID-19 (coronavirus) pandemic.
The SECP has issued instructions to all the NBFCs and NBMFCs here on Wednesday in order to facilitate the lending non-bank finance sector in rescheduling their borrowers. The deferment facility of repayment of principal loans or rescheduling/restructuring would be available to the borrowers of the NBFCs and the NBMFCs.
According to the SECP announcement, the commission), in exercise of powers conferred under sub-section (3) of Section 2828 of the Companies Ordinance, 1984 read with regulations 25 and 67A of the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the "NM Regulations"), hereby allows following relaxations to all lending NBFCs including NBMFCs.
According to the facility, the NBFCs upon a written request of a borrower received before June 30, 2020 may defer repayment of principal loan amount by one year, provided that the borrower will continue to service the mark-up amount as per agreed terms and conditions.
The NBFCs will convey their decision to the borrower within 15 working days after the receipt of the written request. In case, the request of a borrower is declined, the reasons thereof shall be communicated to the borrower.
The above-mentioned deferment will not affect the credit history of the borrower and will not be reported as restructuring in ECIB. The financing facilities of such borrowers, who are unable to service the mark-up amount or need deferment exceeding one year, may be rescheduled/restructured upon their request.
If the rescheduling/restructuring is done within 90 days of the loans being overdue in case of microfinance and within 180 days of the loan being overdue in case of other finance facility, such facilities will continue to be treated as regular and reported in the Electronic Credit Information Bureau (ECIB) accordingly.
The NBFCs shall not classify the financing facilities of such borrowers who have requested for deferment or rescheduling/restructuring, unless the payment obligations are past due by 90 days in case of microfinance and 180 days in case of other finance facility.
If the deferment or rescheduling/restructuring is not executed successfully within the specified past due periods, such financing facilities shall be classified. The aforesaid relaxations shall stand expired on March 31, 2021 and afterwards prevailing provisions of the NBFC regulations shall be applicable.
Moreover, the aforesaid treatment shall be available for loans, which were regular as on February 15, 2020 and became non-performing subsequently, the SECP added.